U.S. stocks fall amid tension, consumer confidence report

DESPITE AN UNEXPECTED RISE IN CONSUMER CONFIDENCE, U.S. equities at the New York Stock Exchange fell Tuesday morning on worries over potential military action in Syria by the United States in relation to the alleged use of chemical weapons there. / BLOOMBERG NEWS FILE PHOTO/JIN LEE
DESPITE AN UNEXPECTED RISE IN CONSUMER CONFIDENCE, U.S. equities at the New York Stock Exchange fell Tuesday morning on worries over potential military action in Syria by the United States in relation to the alleged use of chemical weapons there. / BLOOMBERG NEWS FILE PHOTO/JIN LEE

NEW YORK – U.S. stocks fell, with the Standard & Poor’s 500 Index sliding for a second day, as growing tension over possible military action in Syria overshadowed a report showing consumer confidence unexpectedly rose in August.
All 10 groups in the benchmark equity gauge dropped. American Express Co. lost 1.3 percent to pace declines among financial companies. Barrick Gold Corp. surged 2.4 percent as the precious metal’s price rallied amid the turmoil in the Middle East.
The S&P 500 slid 0.8 percent to 1,643.45 at 10:04 a.m. in New York. The Dow Jones Industrial Average dropped 79.13 points, or 0.5 percent, to 14,867.33, headed for its eighth decline in 10 sessions.
“Everybody’s waiting to see what’s going to happen,” Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by phone. “Is this going to escalate? Energy prices, if they rise a whole lot, could that mitigate all the strength we’ve been seeing lately in the economy? If we’ve got housing prices that start to rise at the same time we have food and fuel increasing, we could see inflation start to rise and that could impact Fed policy.”
The benchmark gauge fell 0.4 percent yesterday, reversing an early gain of as much as 0.4 percent after Secretary of State John Kerry said the United States will hold Syria’s government accountable for using chemical weapons, fanning concern unrest may disrupt Middle East oil supplies.

Growing pressure

President Barack Obama is under growing pressure from U.S. allies and Congress to go beyond denunciations of Syria and take military action after the Aug. 21 attack that opposition groups say killed more than 1,300 people. Iran’s Foreign Ministry warned that a U.S. attack on Syria would drag the whole region into conflict.
Investors are also watching the political wrangling over the approaching limit on federal spending. The U.S. government is expected to exhaust its ability to borrow funds in mid-October, when it will hit the statutory debt limit, according to an estimate from the Treasury Department in a letter to lawmakers released Monday.
“It further adds to the degree of uncertainty that’s out there,” Bateman said.
Treasury Secretary Jacob J. Lew reiterated today that the Obama administration won’t negotiate over the debt limit, saying he thinks lawmakers understand the need to preserve the U.S.’s “rock-solid” pledge to meet its commitments.

Spending cuts

- Advertisement -

House Speaker John Boehner said last month Republicans wouldn’t increase the debt ceiling “without real cuts in spending” that would achieve a further reduction in the deficit.

The S&P 500 has retreated 3.1 percent through yesterday since closing at a record on Aug. 2, amid growing speculation the Federal Reserve will reduce its monthly bond buying. Minutes of the central bank’s July meeting released last week showed policy makers supported stimulus cuts this year if the economy improves.
Data Tuesday showed the Conference Board’s index of U.S. consumer confidence increased to 81.5 in August from 81 the prior month. The median forecast in a Bloomberg survey called for a reading of 79. Estimates of the 75 economists ranged from 74.3 to 82.
A separate report showed residential real estate prices increased in June at close to the fastest pace in seven years. The S&P/Case-Shiller index of property values in 20 cities rose 12.1 percent in June from the same month in 2012 after rising 12.2 percent in the year ended in May. A report last week indicated a larger-than-forecast drop in sales of new homes in July.

Volume drop

Trading in U.S. exchanges is heading for the second-slowest month in at least five years, according to data compiled by Bloomberg. An average of about 5.5 billion shares have changed hands each day this month through yesterday. That’s about 60 million shares more than last August. Trading in S&P 500 stocks today was 20 percent above the 30-day average at this time of day.
All 10 main S&P 500 groups retreated today, led by a 1.1 percent drop among financial stocks. Bank of America Corp. lost 0.9 percent to $14.37. American Express fell 1.2 percent to $72.74.
J.C. Penney slid 0.4 percent to $13.30. Bill Ackman’s Pershing Square Capital Management LP sold its stake in the retailer for $504 million.

Best Buy

Best Buy Co. lost 1.9 percent to $35.14. Richard Schulze, the electronics retailer’s founder and largest shareholder, said he plans to sell an undisclosed amount of its stock to diversify his assets and raise money.
Gold producers rallied as the price of the precious metal climbed to a two-month high. Newmont Mining Corp. edged up 1.6 percent to $33.81 and Barrick Gold increased 2.3 percent to $20.89.
Tiffany & Co. added 0.7 percent to $82.22. The world’s second-largest luxury jewelry retailer said second-quarter net income rose 16 percent to $106.8 million, or 83 cents a share, from $91.8 million, or 72 cents, a year earlier. Analysts had projected 74 cents, according to the average of 22 estimates compiled by Bloomberg.

No posts to display